This invention relates to a transaction network for a synthetic currency (commercially designated as Inside Money). More specifically, this invention relates to alternatives to cash transactions which allow users of the transaction network to conduct electronic currency transactions in a 24-hour international network creating a virtual central bank with near real-time finality of transaction. Synthetic currency is created by pooling and dividing into shares a portfolio of highly liquid assets and by frequent evaluation and disbursement of dividends on those assets so as to hold the value of the synthetic currency share at unity with the underlying currency.
Current methods of cash transactions involve the transfer of cash by using notes or draft instruments. A holder of an instrument must present this instrument to another or a financial institution for payment. The bank, in the case of a check, will verify sufficient funds and then pay cash to the holder and debit the drawee's account accordingly. Electronic debiting and credit means exist. However, such systems do not provide finality for their transaction or accrue interest. Currently, electronic transfer means have no finality for interest based assets. For example, if there are insufficient funds in the drawee's account, the holder will then have to go back to the drawee to demand payment of the check before he can receive cash. Thus, in current transactions, finality of transaction does not exist at the time of transfer of the instrument or token of value. Similarly in stock or mutual fund transfers, current transaction networks include transaction delays because transactions must pass through multiple banking systems before payment finality is achieved. Such delays also prevent cash or currency assets from earning interest for the holder while the cash or currency is transferred to the proper account. There is no current cash or currency exchange network that continuously pays the holder of cash or currency assets a market interest rate.
Currently, potential lenders and potential borrowers of currency must go through intermediaries to identify each other. Once this occurs, the two parties are able to then conduct a transaction between themselves. However, current systems have no means of allowing potential lenders and potential borrowers to obtain real-time transaction based information regarding credit ratings of the other party prior to the transaction.
In current systems, since cash or currency is liquidated during a transaction, current cash or currency assets cannot continuously pay interest throughout the entire transaction.